Efficiency and Effectiveness, not Efficiency versus Effectiveness

Some recent personal experiences as a consumer reminded me of what more generally appears to have become an increasing problem, namely that in the drive to become more efficient, particularly cost efficient, more and more organisations appear to be less and less effective. Of course efficiency in all forms, cost, process and so on are ultimately in the interests of all stakeholders but not at the cost of reduced effectiveness. For example, customers are primarily interested in the effectiveness of a supplier in delivering their good or services to them, although of course how efficiently that is done, particularly in terms of time and the impact of poor efficiency on the cost to them is also important. On the other hand Investors are primarily interested in the efficiency of the organisation in which they have invested, although clearly if the organisation is quite ineffective there is likely to be reduced or little income and by extension a poor return on their investment.

In the service sector in particular, the focus has changed in many organisations. I can recall 30 years ago when I had responsibility for leading service teams, we certainly put the customer at the heart of what we did and by todays’ standards were probably remarkably effective. But the costs of delivering this were very high and would certainly not be possible or justifiable today. Today, efficiency is largely the name of the game and the customer just has to put up with the poor service.  It seems, for example, that the world is full of stories about experiences when trying to telephone a supplier, in which customers have to wait for ages for an answer, have to select option after option on their phone keypad to get through, and having survived this ordeal then have to deal with a disinterested, poorly trained person with little or no authority to make decisions. In the airline industry the arrival of the budget airline has generated enormous pressure to be as cost and process efficient as is possible, but at what a huge ‘cost’ to the passengers!  It’s memorable now when they are not rude to you, or do not treat you like an inert object to be transported from one location to another in much the same way as the luggage in the hold!

So what’s the solution. Well conceptually it is simple. Focus on both efficiency and effectiveness, and not one versus the other. This needs to be ensured at practical working level in culture, leadership, policy, initiatives and tools.  Many of the so called improvement tools fail in this respect. Some of the better models such as EFQM Excellence Model, the Performance Prism and others have always focused on the need for both, but there is plenty of scope to better train and equip managers and teams to work towards a single efficiency and effectiveness objective. In that way excellence – the achievement of sustained and outstanding performance meeting the expectations of all stakeholder groups, will be better assured and conflict between the two “E’s’ will be avoided or at least substantially reduced.